Electronic commerce and technology

Combined private and public sector online sales posted another strong gain in 2002, rising 27.2% from 2001 to $13.7 billion after an increase of 46.0% in 2001. However, e-commerce sales still accounted for only a small fraction of total operating revenues.

The proportion of private sector businesses selling goods and services online rose marginally from 6.7% in 2001 to 7.5 % in 2002, according to the Survey of Electronic Commerce and Technology. Yet, the value of online orders rose 28.4% from 2001 to $13.3 billion in 2002. This follows an increase of 84.1% in online sales in 2001.

In contrast, public sector sales over the Internet totalled $327 million, down 7.8% from 2001. Despite this decline in the value of orders received, the proportion of public sector institutions selling goods and services online rose from 12.8% in 2001 to 14.2% in 2002.

Despite the overall growth, e-commerce sales still accounted for only 0.6% of total private sector operating revenue in 2002, up from 0.5% in 2001 and from 0.2% in 1999.

Electronic business is concentrated in large firms. The 7.5% of businesses that reported selling goods and services online in 2002 accounted for nearly 30% of gross business income in Canada.

The e-commerce market remains volatile. Among the businesses that responded to the survey in both 2001 and 2002, 43% of those that sold online in 2001 stopped selling in 2002. In 2002, seven firms stopped selling over the Internet for every 10 that started.

E-commerce sales highest in wholesale trade sector

For the second straight year, the value of e-commerce sales was highest in wholesale trade, followed by manufacturing, transportation and warehousing, and retail trade. Combined, these industries accounted for 70% of all Internet sales in 2002.

Wholesalers sold $3.7 billion worth of goods and services over the Internet in 2002, up 93% from 2001. This level represented 1.1% of their total operating revenue. Nearly all (94%) of the e-commerce sales by wholesalers were direct to businesses; only 9% went outside the country.

Manufacturers sold $2.0 billion worth of goods and services over the Internet, up 16.5%. This represented 0.3% of their operating revenue. More than 95% of these sales were to other businesses, and 26% went outside Canada.

Transportation and warehousing achieved $1.9 billion in online sales in 2002, up from $0.9 billion in 2001. Despite this increase, Internet sales represented 2.4% of their operating revenue.

Retailers attracted $1.7 billion in online sales in 2002, up 16%. Internet sales represented only 0.5% of their operating revenue, down from 0.6% in 2001.

Large businesses are still the big players in electronic commerce. Enterprises with more than 500 employees were responsible for 41% of sales over the Internet, up slightly from 40% in 2001.

Just over one-quarter of online sales to consumers or households

Only 27% of sales over the Internet were to consumers or households, despite another substantial increase last year. The dollar value of business-to-consumer sales rose 58.5% to $3.7 billion in 2002. Business-to-business sales reached $9.7 billion, an increase of 19.8%.

The retail trade sector accounted for 40% of the business-to-consumer market in 2002, the largest share, followed by the finance and insurance sector (16%) and information and cultural industries sector (13%).

Sales to consumers accounted for 97% of Internet sales from the arts, entertainment and recreation sector, followed by the retail trade sector, where they accounted for 84%.

The wholesale trade sector accounted for 36% of the business-to-business market in 2002, the largest share, up from 21% in 2001. It was followed by the manufacturing sector, which accounted for 20%, and transportation and warehousing, 19%.

Strong gain in online sales destined for domestic market

Although online sales for export in 2002 increased marginally from $2.7 billion to $2.9 billion, the value of domestic online sales rose 35.1% to $10.4 billion in 2002. These sales accounted for nearly four-fifths of total e-commerce sales.

Retail trade had the largest share of the electronic export market, with 33%, followed by manufacturing (17%) and information and cultural industries (13%). More than one-half (56%) of all online sales in the retail trade sector went for export.

One-third of firms make online purchases

The proportion of Canadian businesses buying goods and services over the Internet continued to grow in 2002. About 32% of firms bought goods or services over the Internet, up from 22% in 2001 and 18% in 2000. These same businesses accounted for 65% of all gross business income in Canada.

For the fourth straight year, the proportion of businesses purchasing over the Internet was highest in the information and cultural services industry (60%). This sector includes enterprises involved in publishing, broadcasting, telecommunications, information services and data processing.

Among businesses that did not buy or sell over the Internet, 48% believed that their goods or services did not lend themselves to Internet transactions. About 37% preferred to maintain their current business model. Smaller proportions of these enterprises felt that security was a concern, or that the cost of development and maintenance of a website enabled for e-commerce was too high.

Three-quarters of all firms use the Internet

Although the value of sales over the Internet was small, businesses continued to embrace the Internet in 2002; 76% of them used the Internet, up from 71% in 2001 and 63% in 2000. Firms that used the Internet accounted for 97% of economic activity.

Nearly all (93%) businesses with 20 employees or more used the Internet in the workplace in 2002. Overall, 52% of private sector employees had Internet access, up from 47% in 2001 and from 39% in 2000.

The proportion of businesses using the Internet advanced in nearly all industry sectors. Advances were strongest in accommodation and food services and in real estate, rental and leasing, both up about 21% from 2001.

Nearly one-third of businesses have a website

About 31% of businesses had a website, up from 26% in 2000. These businesses accounted for 83% of all gross business income.

Three-quarters (74%) of firms conducting business in educational services in the private sector had a website, the highest proportion. They were followed by the information and cultural industries sector, where 68% had a website. Those least likely to have a website were in forestry, logging and support activities (9%).

About 15% of enterprises had an internal communications network, or intranet, up from 12% in 2000. Industries most likely to have an Intranet were information and cultural industries, and finance and insurance.

Public sector embraces information and communication technologies

While Canadian businesses continue to show increases in the adoption of information and communication technologies, the public sector appears to have fully embraced them.

For the third straight year, nearly 100% of public sector organizations used the Internet. Almost 88% had a website and 77% used an intranet, up from 85% and 52% in 2000, respectively.

Available on CANSIM: tables 358-0007 to 358-0012, 358-0014 and 358-0015.

Information on methods and data quality available in the Integrated Meta Data Base: survey number 4225.

For more information, or to enquire about the concepts, methods or data quality for this release, contact Bryan van Tol (613-951-6663; bryan.vantol@statcan.ca), Science, Innovation and Electronic Information Division.